Smith New Court leaps ahead to pounds 38m

SMITH NEW COURT, one of the UK's leading independent securities houses, doubled its profits last year to pounds 38.7m. The figure compares with City expectations of about pounds 18m.

Smiths increased the dividend by a third to 6p and announced a pounds 41.2m cash call to fund its businesses worldwide.

In the second half the firm made pounds 32m profit against pounds 6.7m at the interim stage. The advance was partly attributed to the recovery in stock market activity during the period.

Michael Marks, group chief executive, said second-half profits had been earned across a number of deals. The shares rose from 250p to 285p.

Return on capital rose from 17.5 per cent to 28 per cent.

Earnings per share increased by 118 per cent to 36.2p, and Smiths took the opportunity to raise pounds 41.2m through a two-for-seven rights issue at 210p.

Mr Marks said the proceeds would be used as 'working capital to be handed out to our existing businesses where and when it is needed'.

The rights issue will reduce the stake of the Swiss-based Rothschild holding company from 37 to 26 per cent on a fully diluted basis and that of the Carl Marks family. The NM Rothschild stake will remain the same.

The surplus shares will be placed with a dozen institutions. Smiths expects that about 60 per cent of the equity will end up with institutional holders.

The firm did particularly well last year trading securities in the Far East and selling international stocks to US clients.

There were strong rumours in the City yesterday that Smiths, with a number of other stockbrokers, was about to set up an alternative stock market for smaller companies following the abolition of the USM last autumn.

But Mr Marks dismissed the suggestions as 'a lot of waffle', adding: 'We are certainly not involved in any talks on this.'

Smiths took over market-making for more than 200 small companies last year and now makes markets in more than 1,300 UK equities.

View from City Road, page 26

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